401(k) rollover glossary
Inherited IRA
An inherited IRA holds retirement money you receive as a beneficiary. Non-spouses get no 60-day rollover, and most must empty the account within 10 years.
An inherited IRA (also called a beneficiary IRA) is the account that receives retirement money you inherit. It must stay titled in beneficiary form — something like 'John Smith, Deceased, IRA FBO Jane Smith, Beneficiary' — showing both the original owner and you. A non-spouse beneficiary can never retitle the money into their own IRA; doing so is treated as a full taxable distribution.
The single most dangerous rule: non-spouse beneficiaries have NO 60-day rollover. If the custodian cuts a check made out to you personally, the entire amount is immediately and permanently taxable — there is no 60-day window to fix it, no self-certification, no relief. Inherited IRA money may only move by direct trustee-to-trustee transfer, from one properly titled inherited IRA to another.
For deaths in 2020 or later, the SECURE Act's 10-year rule applies to most non-spouse beneficiaries: the account must be fully emptied by December 31 of the year containing the 10th anniversary of the owner's death. A limited class of 'eligible designated beneficiaries' — a surviving spouse, the owner's minor child, a disabled or chronically ill person, or anyone less than 10 years younger than the owner — can still stretch distributions over life expectancy.
There is a wrinkle inside the 10 years. Under the IRS final regulations issued in July 2024, if the original owner died on or after their required beginning date for RMDs, the beneficiary must also take annual RMDs in years 1 through 9 — not just empty the account by year 10. The IRS waived penalties for missed beneficiary RMDs through 2024; enforcement began in 2025. If the owner died before their required beginning date, no annual RMDs are required — only the year-10 deadline.
Surviving spouses have far more flexibility: they can treat the inherited IRA as their own, roll it into their existing IRA, or remain a beneficiary — each option with different RMD and early-access consequences.
Inherited 401(k)s follow broadly similar rules with plan-specific wrinkles — many plans force money out faster than the law requires, and the transfer to an inherited IRA must be handled precisely. See the inherited accounts guide for the step-by-step path.
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Frequently asked questions
- Can I roll an inherited IRA into my own IRA?
- Only if you are the surviving spouse. A spouse can treat the account as their own or roll it into their existing IRA. A non-spouse beneficiary can never combine inherited money with their own IRA — it must stay in a separately titled inherited IRA until distributed.
- The custodian sent me a check from the inherited account — can I put it back within 60 days?
- If you are a non-spouse beneficiary: no. The 60-day rollover does not exist for inherited IRAs — a check payable to you personally is a permanent, fully taxable distribution. This is why every movement of inherited money must be a direct trustee-to-trustee transfer between properly titled inherited IRAs.
- Do I have to withdraw every year, or just empty the account by year 10?
- It depends on when the original owner died relative to their RMD required beginning date. Died on or after it: you owe annual RMDs in years 1–9 plus full distribution by year 10 (enforced starting 2025). Died before it: no annual requirement — just empty the account by December 31 of year 10.
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This glossary entry provides educational information based on IRS rules. It is not tax or legal advice for your specific situation.